View of IMPORTANCE OF CASHLESS TRANSACTION IN INDIA POST DEMONETIZATION

(1)

ACCENT JOURNAL OF ECONOMICS ECOLOGY & ENGINEERING Peer Reviewed and Refereed Journal (International Journal) ISSN-2456-1037

Vol.04,Special Issue 05, (ICIR-2019) September 2019, Available Online: www.ajeee.co.in/index.php/AJEEE

1

IMPORTANCE OF CASHLESS TRANSACTION IN INDIA POST DEMONETIZATION Ritu

Scholar of JJT University Jhunjhunu Rajasthan

Abstract- In present the world is experiencing rapid and increasing use of digital methods of recording, managing and exchanging money in all transactions. With the revolution of Smartphone’s it gives new way to digitalization. It led the society to the emergence of E- commerce, M-commerce and other services including app-based cab aggregators, who encourage digital payments for use of various services in digitalized form. These major changes in technology space will not only bring changes to economic system but make a revolution to change habit of Indian citizens to adopt digitalization.

To support these changes for becoming cashless the digital India programme became a flagship programme of government of India with a vision to transform India into a digitally empowered India and gave knowledge of “faceless, paperless and cashless”

economy to the Indian society. These professed roles of digital India became an ambitious mission of government of India to drive India towards a cashless economy.

The move of demonetization swayed everybody. It resulted into a panic situation because people were short of cash in their hands. The consequences of demonetization led the people to use of digital payments and online transactions in almost all parts of India.

Key Words: Demonetization, Digitalization, Digital Transactions.

1 INTRODUCTION

The aim of making Indian economy a cash less economy boosted by the announcement of demonetization by our former prime minister Narendera Modi on 8-november-2016. In 2016 at time of demonetization the situation forces Indian citizens to adopt cashless transaction methods to fulfill their day to day requirements of payments. Cashless transactions have made people keep all their cash into the bank and hence the liquidity of banks increased it gives a new favorable condition to Indian economy for development.

The cashless societies have existed with the time of human came into existence in the society based on barter and other exchange methods. In modern world cashless transactions have also become possible by using digital currencies such as bit coin. Before 8^th November 2016 a economy with lower cash transaction in India seems to be unreal if we used to look at the older picture of the Indian economy but in present scenario is deviating economy towards cashless future. The Indian economy is experiencing a series of deviation in economy toward cashless after midnight of 8^th November after announcement of demonetization.

2 DEMONETIZATION IN INDIA

Demonetization 2016 is a story that is suddenly starts in India but figure out in front of Indian citizens slowly. On 8^th November 2016 the government of India announced the demonetization of all Rs 500 and Rs 1000 banknotes of mahatma Gandhi series and also announced the issue of new banknotes in exchange for the demonetized banknotes. The Indian government claimed that the action would curtail the shadow economy and reduce the use of illicit and counterfeit cash to found illegal activity and terrorism.

Initially the move received support from several bankers as well as from some international commenter’s .The move was also criticized as poorly planned and unfair and was met the protest, litigation and strikes against the government in several places in India.

Debate also took place concerning the move in both houses of parliament. Effect of demonetization was followed by prolonged cash shortage in the weeks that followed which created disruption throughout the economy. People suffering to exchange their banknotes had to stand in lengthy queues and its gives several deaths linked to rush to exchange cash?

3 ADOPTION OF CASHLESS TRANSACTIONS IN INDIA

On 8^th November 2016 at the time of announcement of demonetization its not present any relationship between demonetization and digitalization .There is not any notice in government gazettes of declaring demonetization but in mean time story of demonetization change into the phase of digitalization of money transactions.

(2)

2

After the announcement of demonetization the next morning of 9^th November 2016 all newspaper headlines make advertisement for the introduction of mobile wallets. All companies which deal in business of digitalization found demonetization as a opportunity to increase their business.

The path towards digitalization in India starts with e-commerce startups, such as Amazon, flip kart, jabong, snap deal etc. According to Economic Times after few days of demonetization transactions in e-wallet companies had increased by more than 700%.

Slowly but surely in India digital transaction becoming popular. All this led to the people getting familiarized with digital platforms and online transactions. It’s accelerated the trend towards digitization and cashless transactions. Within a couple of weeks after the demonetization the narrative of the goals of the demonetization dramatically shifted from the black money and fake currency to the virtues of digital economy. Consequently to this India witnessed a publicity that promoted digital transactions. Digidhan melas were organized to encourage people to embrace the digital economy.

4 CASHLESS TRANSACTIONS IN INDIA

Citizens digitally in a economy where all type of money transactions are done through digital means is called cashless economy. Digital transaction means use of debit cards, electronic fund transfer, mobile wallets, and newly evolved payment applications. Payments are done by digital transactions instead of using real cash. In other words we can say less cash economy where more of transactions performed by their literates and tech savvy.

5 REVIEW OF LITRATURE

Dr.S.Manikandan And J.Mary Jayakodi (2017) - In their research paper ‘An Empirical Study On Consumer Adoption Of Mobile Wallet With Special Reference To Chennai City’

they found that in present world smart phones play an important role in the daily life of people. P.Pani Bhaskar and D.Prasanna Kumar (2017): In his paper ‘Affect of Demonetization on E-Commerce’. The authors clear about the E-Commerce ecosystem.

Before the demonetization in India situation of E-Commerce is the accurate flat form for the development for online business but the situation of demonetization leads the people to adopt the online transactions or net banking in their day to day life. Preeti Garg and Manvi Panchal (2016) - According the study on ‘Introduction of Cashless Economy in India 2016’ the research scholars explain the benefits and challenges towards adoption of cashless economy in India. After demonetizing the Indian government has implemented major changes in their economic environment of commerce.

5.1 Objectives

1. To introduce the method of cashless transaction in India.

2. To describe the advantages of cash less transactions.

3. To describe the disadvantages of cashless economy.

6 SIGNIFICANCE OF THE STUDY

On 8^th November 2016 after the announcement of demonetization become causes of unavailability of cash in hands of people government encourage the peoples to use cashless transactions. After demonetization many modes of transactions are invented. In fact government invented a payment system for non smart phone users which link with their account. They introduce the alternate of cash in front of Indian people for ex. prepaid cards, Debit cards, rupay cards, mobile wallets, net banking etc. In a short time period, demonetization has led to the adoption of E-wallets, and credit and debit cards as a means of payment. Cash transaction replaced with such digital payment system almost at least in urban areas. With demonetization the country’s path to digitalization was smoothened and the time to achieve a cashless society has been compressed.

Thus this paper is fully started by focusing on consumer awareness in innovation and usage of cashless transaction.

7 DATA COLLECTION

For data collection secondary data collection method is adopted and data collected from news papers, internet, magazines and research journals.

(3)

3 8 MODE OF CASHLESS TRANSACTIONS IN INDIA

In India November 2016 the time of demonetization is not only for the purpose of remove black money but it’s time to go cash less. It is time to adopt cashless transaction instead of breaking your heads in queue of ATM. Following are some cashless payment methods:

 CHEQUE

 DEMAND DRAFT

 ONLINE TRANSFER-NEFT or RTGS

 PLASTIC MONEY LIKE CREDIT or DEBIT CARDS

 E-WALLETS

 MOBILE WALLETS

 UPI APPS

 AEPS (Aadhaar enabled payment system)

 NET BANKING

 BHARAT QR CODE

 POS POINT OF SALE

 MOBILE BANKING

 BHARAT INTERFACE FOR MONEY

Cheque: It is an order to a bank to pay a stated sum from the drawer’s account written on a specially printed form.

Demand Draft: It is a financial draft payable on demand.

Neft: National electronic fund transfer is a nation- wide payment system. Under this scheme, individuals can electronically transfer funds from any bank branch to any individual having an account with another branch

Rtgs: It is also a fund transfer system like NEFT. Real time gross settlement is electoronicall transfer system.

Plastic Money: In plastic money we include debit, credit cards, prepaid cards store cards etc. They are hard plastic cards we can use in place of money with actual accounts.

8.1 Advantages of Cashless Transactions

1) Cash less transactions are convenient and helps to ease of conducting financial transactions.

2) Cash less transaction helps in tracking of spends it will make easy to make track of their spending

3) Cash less transactions helps in making budget discipline.

4) Cashless transactions lower the risk of carrying currency notes.

5) Cash less transaction decreased the crime related to cash.

6) Cash less transactions reduced the tax evasion activities 7) Cash less transactions helps in curbing the corruption.

8) Cash less transaction helps in curbing the black money.

9) Cashless transaction helps in getting discounts which helps in money saving.

10) Cashless transaction saves the time.

11) Cash less transactions helps in accounting process in transparency and accountability.

12) Cash less transactions helps in reduction of red tapism and bureaucracy.

8.2 Disadvantages of Cashless Transactions

1) Many of retailers deal in cash only as they don’t have the necessary insight or affordability to invest in digital payment systems

2) Taxes and surcharges need to be subsidized to make people more accepting of the changes.

3) The burden on banks as they would tasked with newer methodologies and techniques.

4) Not many in India are tech savvy.

5) Riskier than traditional means of transaction.

6) One has to place complete trust on third parties as they are the ones who actually control the transactions.

7) Limited to urban and semi urban cities only.

(4)

4

8) Lack of adequate internet network at many places in the country.

9) Credit cards payments, internet banking etc, involves transaction fee which is not there against cash payment.

10) Specific sectors might be affected due to lack of cash such as the cement industry, jewelry and retail industry.

9 CONCLUSIONS

With more significant challenges such as illiteracy and lack of adequate infrastructure facing the country, it would be herculean task to make India one of the few countries to have a cashless economy. However the merits associated with a cashless economy are far more than the demerits. The smart phone revolution has led to the emergence of e- commerce, m-commerce and other services including app based cab aggregator. The value added services such as cash back, bill payments facilities, loyality points, rewards and ease of use have resulted in surge of such digital platforms. These developments had given rise to a modern payment model. Further to incentivize behavior change and bring down the cost of digital payments referral and cash back schemes have also been launched for BHIM where users merchants receive cash back. Day to day growth in customer’s enrollment with leading mobile wallets after demonetization.

REFRENCES

1. Edelweiss Report 2016, A Report on Demonetization, “A Ground Zero: Better Seen Than Heard”, Edelweiss research team proud sponsor of 2016 Indian Olympic Team, Edel Invest Research.

2. Jarvelian Jonna (2003),”The Impact Of Prior Online Shopping Experience On Future Purchasing Channel, Vol-6, Issue-4,Ijrs.

3. K.Suma Velly and K. Hema Divya(2018),”Digital Payment In India With Perspective Of Consumer Adoption”,Vol-118, Issue-24, International Journal Of Pure and Applied Mathematics

4. Naincy Prajapati And Sanjeev Kumar Singh(2017),”Impact Of Demonetization On Online Transaction”, Vol-3, Issue-7, IJIRMF.

5. P.Pani Bhaskar and D.Prasanna Kumar(2018),”Affect Of Demonetization On E-commerce,Vol-6, Issue-4, Review Of Research.

6. R.Ramkumar (2017), “India’s exclusive Chase For Black Money Note Bandi”, ISBN-978-0-19-948679-3, Replika Press Pvt.Ltd.

7. Ravi Kalakotaand Andrew B.Whinston (2009),”Frontiers of Electronic Commerce”,ISBN-978-81-7758-392- 2, Dorling Kindersly Pvt. Ltd.